NVIDIA has announced a combined $4 billion investment in two leading photonics companies — Coherent Corp. and Lumentum — marking one of the chip giant’s boldest moves yet to secure the optical infrastructure powering next-generation AI data centers.
The deals, announced on March 2, 2026, involve two separate nonexclusive, multiyear strategic agreements. NVIDIA is committing $2 billion to each company in exchange for multibillion-dollar purchase commitments and future access rights to advanced laser and optical networking products.
A Strategic Bet on Silicon Photonics
The investment reflects a clear conviction from NVIDIA that optical interconnects are no longer optional — they are essential. As AI workloads grow exponentially, traditional copper-based connections are struggling to keep pace with the bandwidth and energy demands of large-scale AI computing clusters.
Silicon photonics and advanced optical networking have emerged as the leading solution. By using light instead of electrical signals to move data, optical interconnects can deliver significantly higher bandwidth while consuming less energy — a critical advantage for AI factories running millions of computations per second.
NVIDIA CEO Jensen Huang framed the shift in direct terms. “Computing has fundamentally changed,” Huang said. “In the age of AI, software runs on intelligence with tokens generated in real time by AI factories for every interaction and every context. With Coherent, NVIDIA is pioneering next-generation silicon photonics to enable AI infrastructure at unprecedented scale, speed and energy efficiency.”
What Each Partner Brings to the Table
Both Coherent and Lumentum are already embedded in NVIDIA’s current product ecosystem. The two companies supply components for NVIDIA’s Spectrum-X networking switches — with Lumentum providing lasers and Coherent contributing silicon photonics technology. NVIDIA recently expanded that platform further, announcing a multi-year, multi-generational partnership with Meta to scale AI computing workloads using Spectrum-X across Meta’s infrastructure.
With the new investments, each company will expand its manufacturing and research capacity to meet surging demand for optical components. Lumentum plans to build an entirely new device fabrication facility, while Coherent will grow its existing U.S.-based manufacturing operations.
Coherent CEO Jim Anderson welcomed the deepened relationship. “This strategic relationship underscores Coherent’s role as a key enabler of next-generation AI data center infrastructure,” Anderson said. “We are proud to expand our 20-year relationship with NVIDIA by increasing their access to include multiple product families to help them build the AI data centers of the future.”
Lumentum CEO Michael Hurlston was equally optimistic. “This multi-year strategic agreement reflects our shared commitment to advancing the optics technologies that will power the next generation of AI infrastructure,” Hurlston said. “In support of this collaboration, we are also investing in a new fabrication facility to increase capacity and accelerate innovation.”
Deal Structure and Stock Reaction
According to filings with the U.S. Securities and Exchange Commission, NVIDIA paid $2 billion in cash to acquire nearly 2.9 million Lumentum shares at $695.31 per share. For Coherent, NVIDIA acquired nearly 7.8 million shares at $256.80 per share, also paid entirely in cash.
News of the investments sent shares of both companies surging. The announcements built on momentum already well underway — over the past year, Lumentum’s market valuation had grown tenfold, while Coherent’s had more than quadrupled.
Both agreements are nonexclusive, meaning the two photonics firms remain free to serve other customers and partners.
Why This Reshapes AI Infrastructure
The scale of NVIDIA’s commitment signals that optical technology is moving from the edges of AI infrastructure to its core. As AI factories grow larger and more power-intensive, moving data faster and more efficiently between chips and systems becomes a defining competitive advantage.
Coherent’s agreement specifically highlights that optical interconnects and advanced package integration are foundational to unlocking ultrahigh-bandwidth, energy-efficient connectivity across AI factories. By securing long-term supply agreements and investing directly in manufacturing capacity, NVIDIA is working to eliminate supply bottlenecks before they can slow the global buildout of AI infrastructure.
The partnerships also reflect a broader shift: AI chip leaders are no longer focused solely on designing faster processors. They are integrating across the entire hardware stack — from compute to connectivity — to maintain their position at the center of the AI era.
